Oh 2017, how I long to have you back. In truth, the value of the portfolio topped out in November of last year, and has been falling steadily since. Total return year to date in 2018 has been -10.02% against the FTSE All-Share TR of –6.87%. I’m falling behind my benchmark, which is very disappointing. However, nothing will be changing as a result. I’ve been here before. I’ll be here again. Total return since inception is a more pleasing 51.79%, against a 27.8% increase for the FTSE All-Share. So I’m well ahead of the benchmark since inception. That’s the important thing. You can view the portfolio here.
Firstly, a bit of an apology. I’ve not been writing very much recently as I’ve not been well. I am hopefully on the mend and do intend to get back to writing weekly when I am able to. I’ve taken a bit of a break from markets in general. No stock research, no portfolio management. I’m quite fortunate in that I find it easy to let my portfolio work for (or in 2018 against) me.
As mentioned, not a lot has happened in the portfolio so far this year. My intention has always been to research and buy quality companies and then let them do their thing. In better news, none of my holdings have given me real cause for concern. So why the poor performance so far?
The big drag on the portfolio this year has been the poor performance of Creightons PLC, which at one point hit about an 18% weighting, and which is down nearly 42% YTD. In February the company issued a trading update which basically said that demand had outpaced production capability and therefore management had to outsource some production to other suppliers. This will have a consequential impact upon both margins and net income, which are forecasted to be lower than last year. I’ve seen mixed views on this turn of events from others who hold. In my humble opinion whilst it could be argued that the company could/should have foreseen this, its a rather positive position to be in, and one that management are working hard to rectify. I’ve always been impressed by the executive team at CRL and remain confident in their ability to grow the business significantly over time.
Taptica are another company having a miserable 2018. Down nearly 33% year to date, I’m beginning to wonder if I misjudged the merits of this investment. On a fundamental business it remains a solid and appealing company. A good portion of the fall has come in the wake of revelations surrounding Facebook and Cambridge Analytica. Taptica are of course a marketing partner with Facebook and so correspondingly the share price has fallen, even though this should have little to no effect on the business. However Taptica also do business with many other large-cap, international companies such as Disney and Amazon.
I sold Plus500 in January for one main reason. As good as the fundamentals are, the company remains susceptible to regulatory change. Even the suggestion of changes last year was enough to knock somewhere around 40% off the price in a matter of days. I’m ok with volatility, but that’s pushing it. Give me a safe, boring, predictable company any day.
I’m sorry to say that this is quite a boring update! In October, my portfolio sat on a P/E of over 22. It is currently lower, at 15.47. With more rate rises on the horizon and UK indices now firmly below the 200 day moving average, are we looking at a downturn? I’ve no idea. I’m not about to attempt to time the market, so I’ll be continuing to stay invested.
In the mean time, I look forward to getting back into company research and markets generally.
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